MacroBusiness covers Australian banks from the perspective of their macro-economic role, as political economy actors, as investment propositions and in terms of financial stability and capital adequacy. Australian banks have played a crucial role in inflating the Australian property bubble, exist within an utterly privileged position as “too big to fail” institutions and operate within a deeply distorted financial architecture that has Australian tax payers well and truly on the hook in the event of trouble. MacroBusiness seeks to define this role for investors as well as change it in the name of the Australian national interest.
From Reuters: Exec says expects “reasonably strong” credit growth in business banking going forward * Exec says comfortable with stress levels in commercial business bank, not seeing “major cracks” * Exec says seeing some stress in consumer loans Recall the significant uptrend in auto ABS from a few weeks back, from Moodys: That trend looks
From Gotti today: The great bear raid on Australian banks continues. Someone is going to be wrong. The global hedge funds say that Australian bank chief executives and boards are misleading the market and their shares are headed for a big fall, which will almost certainly send Australia into recession. But “mum-and-dad investors”, the so-called
From Chris Joye today: If we look at Macquarie’s “internal ratings based” home loan book, which was $29.3 billion in December 2015, the total impaired and 90 days overdue non-performing loan rate was 0.84 per cent. The comparable statistic from CBA in December was 0.51 per cent (Macquarie is better than CBA on 90 days
As noted recently, Australian financial regulators have embarked on an intensive jawboning campaign in support of lowering bank funding costs. It does not appear to be having the desired effect given funding costs are again on the charge with CBA CDS moving another couple of percent higher yesterday to 119.5bps: US and European baking system
Welcome to the great Australian funding squeeze. From Goldman: Our macro team has recently reinstated their view that the Reserve Bank of Australia (RBA) will cut cash rates two more times in CY16 (Australia and New Zealand Economics Analyst: Forecast Change: Why the RBA will cut again, February 18, 2016). In this piece we undertake
Never mind the dollar. The RBA and APRA are too busy jawboning Australian bank funding costs to worry about that. In the past week we’ve had speeches from Lucy Ellis of the RBA and Heidi Richards of APRA desperately explaining why it is that Australian banks are prudentially sound and fortified against the business cycle.
Chris Joye has unearthed a spectacular story on Macquarie Bank that leaves one breathless vis Australian prudential oversight: In a February briefing Macquarie revealed that since Brazil established his new group, Corporate and Asset Finance (CAF), in 2009 the bank had invested an astonishing $33 billion in around 500 high yield loan exposures (including $1 billion into
Some more relief for Australian bank funding costs Friday, as expected. As global credit spreads also come in, CBA saw its CDS price tumble six points to 104bps: Wells Fargo and Credit Agricole were stable so the relief was Australian specific as US, emerging market and commodity high yield credit continues to de-stress. This the
By Leith van Onselen Heidi Richards, APRA’s General Manager of Industry Analysis, has delivered a speech today entitled A Prudential Approach to Mortgage Lending, which delves into Authorised Deposit-Taking Institution’s (ADIs) mortgage lending and finds that Australia’s ADI’s have significantly improved their risk management practices. Below are the key extracts: Why has APRA committed so
The CBA CDS price is finally demonstrating the easing I’ve been expecting for some weeks down four points from my last update to 110bps. Comparable banks Wells Fargo and Credit Agricole have actually seen a little widening in the same period: Thus the Australian Ponzi Index has fallen back a little further from its recent peak:
From S&P today: MELBOURNE (Standard & Poor’s) March 18, 2016–Australian housing loans in arrears increased again in January for prime and nonconforming residential mortgage-backed securities (RMBS), as measured by Standard & Poor’s Performance Index (SPIN). Arrears levels for prime RMBS increased to 1.07% in January 2016 from 0.96% in December 2015, according to Standard &
The Australian bank funding cost rocket is still refusing to cool off. Yesterday CBA CDS prices were unchanged at 120bps: Meanwhile, our US and European cousins are seeing enormous relief: Australian banks continue to lead developed market funding stress in this cycle now with an eye-popping spread to the US and Europe. This may mean
From Deutsche today: Inside the Bank Vault this week we highlight key valuation trends in the bank sector over the last month as well as take a look at the week’s global bank regulation news. The major banks on average are currently trading at a ~2% discount to their 5 year historical avg absolute PER
The Australia bank funding cost rocket is back after just one day’s relief. CBA CDS recovered most of its losses from the day before to end up 8% to 130bps: Global spreads continue to out-perform Australian: I still think we’re likely to see improvement before things get worse again. It’s really all about oil. From Banking
Yesterday saw a step change in the CBA CDS price which finally contracted materially by -9% to 120bps: This is tracking improved global credit spreads as the bear market rally in commodities eases fears of bad loans flowing into banks: However, very steep up-trends remain in place and Australian banks are still clearly leading the widening.
From Banking Day: Specialist Chinese-language mortgage broker N1 Loans has closed its initial public offering, raising equity capital of A$5 million, and will list on the Australian Securities Exchange on March 18. N1 plans to use the proceeds of the float to help invest in a more prominent online presence and increase its marketing activity.